How to Get a Business Loan With Bad Credit

Video Transcript

"Hello, my name is Emily Gasner, and I'm with Working Solutions. I'll be talking about how to obtain a business loan with less than perfect or bad credit. If you actually go to a bank and try to get a business loan, they're definitely going to run your personal credit. So the higher your FICO score, which the score can be from three hundred up to eight hundred and fifty, the better for your business. But what if you're on the lower end of that score? Oftentimes banks have a cutoff point, where perhaps--and you have to check with each bank on what their requirement is--you might have to have, for example, a six hundred and forty FICO score or higher in order to apply with them. So find out in advance before they actually run your credit. I think a lot of times it's tough for banks and financial institutions to lend to people with bad credit, so I think my number one suggestion would be just clean up your credit before you actually apply for a loan. What you can do is go to annualcreditreport.com, a website through the government to check your personal credit with each of the three bureaus, which is Trans Union, Equifax, and Experian. Once you find your credit report, make sure you understand what's on there. You want to make sure that you pay any collections that you're paying on time, and that you clean up anything that may be errors. You may have to dispute it with creditors and write letters and keep very good records of that, or you may have to also dispute it with the credit bureaus and ask them to remove any information that's not correct. So, it takes time, but I've seen a lot of people that have been able to improve their credit so that they have been able to go to a financial institution and obtain a loan. Now, also, if your credit isn't that great, there's also a number of nonprofit organizations that lend money to people for businesses that you don't need to have perfect credit. So perhaps you had a bankruptcy a few years ago, but you've been clean on your credit since then. So research into the organizations in your local area that might be providing business loans and find out exactly how flexible they are on the credit, and ask them if the type of credit you have, and your issues that you had in the past, will prevent you from getting a loan from them. They also might have other ideas from you on how to come up with other funds for your business that might not necessarily be loans. Good luck."